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The Economist Magazine 21st January 2022

The relationship between governments and businesses is always changing. After 1945, many countries sought to rebuild society using firms that were state owned and managed. By the 1980s, faced with sclerosis in the West, the state retreated to become an umpire overseeing the rules for private firms to compete in a global market —a lesson learned, in a fashion, by the communist bloc. Now a new and turbulent phase is under way, as citizens demand action on problems, from social justice to the climate. In response, governments are directing firms to make society safer and fairer , but without controlling their shares or their boards. Instead of being the owner or umpire, the state has become the backseat driver. This bossy business interventionism is well intentioned. But, ultimately, it is a mistake.

Signs of this approach are everywhere , as our special report explains. President Joe Biden is pursuing an agenda of soft protectionism, industrial subsidies and righteous regulation, aimed at making the home of free mark ets safe for the middle classes. In China Xi Jinping’ s “Common Prosperity” crackdown is designed to curb the e xcesses of its freewheeling boom, and create a business scene that is more selfsufficient, tame and obedient. The European Union is drifting away from free markets to embrace industrial policy and “ strategic autonomy”. As the biggest economies pivot, so do medium sized ones such as Britain, India and Mexico. Crucially, in most democracies, the lure of intervention is bipartisan. Few politicians fancy fighting an election on a platform of open borders and free markets.

That is because many citizens fear that markets and their umpires are not up to the job. The financial crisis and slow recovery amplified anger about inequality. Other concerns are more recent. The world’s ten biggest tech companies are over twice as big as they were five years ago and sometimes seem to behave as if they are above the law .

The Economist Magazine 21st January 2022


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